Can a trust beneficiary sue on a contract after the trust dissolves? Hillcrest Investment v. UDOT Explained

In Hillcrest Investment Company v. Utah Department of Transportation, the Utah Court of Appeals addressed whether a trust beneficiary can enforce contractual rights after the original trust dissolves, highlighting important questions about standing and contract enforcement in trust dissolution scenarios.

Background and Facts

UDOT condemned property owned by the Horman Trusts for the Legacy Parkway project. During negotiations, UDOT promised to construct a frontage road to provide access to the remaining undeveloped property. The parties entered into a Right of Way Contract based on this understanding. Later, the Horman Trusts conveyed all their real estate to Hillcrest Investment Company through a Real Estate Purchase Contract. When UDOT failed to build the promised frontage road, Hillcrest sued for breach of contract and unjust enrichment.

Key Legal Issues

The central issue was whether Hillcrest had standing to enforce the contract as either: (1) an assignee of the contract rights under the Real Estate Purchase Contract, or (2) a beneficiary of the SCV Trust after the trust’s dissolution. The district court granted summary judgment, finding Hillcrest lacked standing under either theory.

Court’s Analysis and Holding

The Court of Appeals rejected Hillcrest’s assignment argument, finding the Real Estate Purchase Contract unambiguously conveyed only “real estate” and contained no express language of assignment for contractual rights. However, the court found genuine issues of material fact regarding Hillcrest’s standing as a beneficiary of the dissolved SCV Trust. Under trust law principles, when legal and equitable title merge in a beneficiary after trust dissolution, the beneficiary can sue third parties directly. The court noted that Manager’s deposition testimony, while not conclusive, created sufficient factual questions about the trust’s liquidation and Hillcrest’s beneficial interest.

Practice Implications

This decision emphasizes the importance of thorough documentation in trust dissolution cases. When standing depends on trust relationships, practitioners must ensure the record includes complete trust documentation, dissolution records, and clear evidence of asset distribution. The court’s willingness to remand based on deposition testimony alone demonstrates that summary judgment on standing issues requires careful factual development, particularly in complex trust scenarios where beneficial interests may transfer upon dissolution.